June 05, 2014

NAFCU supports CFPB points-and-fees 'cure'

June 6, 2014 – NAFCU Regulatory Affairs Counsel Angela Meyster told CFPB the association supports its proposed, limited post-consummation cure mechanism in dealing with points and fees for certain mortgage loans.

The bureau proposes to amend certain mortgage rules under the Truth in Lending Act to include a cure mechanism which would apply to loans originated with a good-faith expectation of qualified mortgage status but inadvertently exceed the QM points-and-fees limit.

"According to an April 2014 survey conducted by NAFCU, 13% of respondents' 2013 mortgage originations would not have met the new qualified mortgage criteria and nearly half of respondents stated that they would cease to originate non-qualified mortgage loans," Meyster wrote. "Credit unions are likely to avoid originating a loan that is close to the points-and-fees limit due to concerns that the loan will not achieve qualified mortgage status and leave the credit union exposed to potential litigation. A post-consummation cure mechanism will allow credit unions to feel more comfortable originating loans with points and fees close to the qualified mortgage limit, thus expanding the total credit available to consumers."

Meyster also urged the agency to replace the proposed 120-day post-consummation period with a 60-day period from the discovery of excess points and fees.

Meyster also urged the agency to consider providing similar protections to credit unions as they do for other nonprofit organizations. For example, the proposed amendments would provide an alternate definition for "small provider" which would be limited to 501(c)(3) nonprofit organizations, excluding credit unions. The rule would exempt certain interest-free, contingent subordinate liens from the credit extension limit under the law's ability-to-repay requirements.